Investor sentiment has dropped by an average of 10.1 percentage points in the past year as Brexit uncertainty hurt confidence in UK assets, according to a survey by Lloyds Private Bank.
The monthly poll of private investors found investor sentiment around UK shares, UK corporate bonds and UK property all fell to their lowest recorded levels in the last month of the year.
Average net sentiment stood at -4.5 per cent, with UK property recording -21.7 per cent. Sentiment towards UK shares stood at -27.1 per cent while UK government bonds recorded -13.7 per cent.
Sentiment towards UK property had declined 35.9 per cent year on year but was offset by emerging markets, which saw an upswing of 8.9 per cent in the year.
The survey was based 4524 adults, of which 1127 were investors, undertaken between November 29 and December 3, 2018.
However, Lloyds stated the decline in sentiment did not reflect actual asset class performance, as UK shares and UK government bonds had increased slightly last month.
UK shares were up 0.2 per cent in November, according to data collected from Datastream to end of trading on November 29, 2018. UK government bonds were up 0.3 per cent in the month.
Markus Stadlmann, chief investment officer at Lloyds Bank Private Banking, said: "We reduced global equities in portfolios earlier in the year, based on rising geopolitical uncertainty, overheated sentiment, and trade war rhetoric.
"During recent weeks, valuations have reached more attractive levels and investor sentiment has moderated. While global economic growth will continue to soften in early 2019, financial markets have largely digested this deceleration."
He added: "While Asian markets have been pricing in pessimistic sentiment on Chinese growth, the level of real business in the economy has remained relatively resistant.
"The Peoples Bank of China is taking a number of steps to stimulate the economy. In unison, several public institutions are fast tracking projects through approval to stabilise capital investment and bolster economic growth in China.
"The healthy rise in investor sentiment for emerging markets supports our view that China could present the biggest opportunity for growing investments in 2019."
Lloyds found 'safe haven' investments such as gold continued to enjoy the confidence of investors as net sentiment stood at 39.7 per cent.
It warned investor sentiment for gold had reached overheated levels which "often signal a peak in prices".
The performance of gold was down 0.1 per cent in November and 5.1 per cent in the past 12 months.
carmen.reichman@ft.com
